• Monday, February 26, 2024
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BusinessDay

Nigeria’s industrial revolution

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About a fortnight ago President Goodluck Jonathan rolled out a new industrial plan for our country; an event that was launched with much fanfare at the magnificent Banquet Hall of Aso Villa. The President explained that the plan will place Nigeria among the first ranks of advanced industrial nations; adding an annual 5 trillion naira (about US$30 billion) to the economy while providing jobs for  over 17 million people. An additional plank to the Nigeria Industrial Revolution Plan (NIRP) is the National Enterprise Development Programme (NEDEP) which aims to rejuvenate the small enterprise sector.

 This may be coming rather late in the day, but, by Jove, it had better be late than never! I have always insisted that a country of nearly 200 million people has absolutely no alternatives but to industrialise – and to do so with the greatest speed. Only through an industrial revolution can we absorb the teeming army of unemployed youths while maximising our potential as one of the leading nations of the 21st century.

 When some of us were growing up in the seventies, Kaduna, the city of my childhood and youth, had no less than a dozen textiles mills employing hundreds of thousands. There was a thriving middle class. Local industries flourished and supermarkets such as Leventis, UTC, Lennards, Bata, Chellarams and Kingsway were to be found in all our major cities. By the 1990s, however, manufacturing had been virtually wiped out. The middle class disappeared, and with it, the supermarkets. The downward spiral of economic decline spurred by a brutal and venal military tyranny took its toll on the on the morale of a once proud and happy people.

 Before long, the Washington boys descended like vultures over a dead carcass. They told us we did not need planning. They forced us to cut back on higher education, leading to the collapse of our once world-class universities. They insisted we should concentrate on artisanal handicrafts and forget what they regard as the unattainable dream of becoming an industrial-technological giant. The nation was engulfed in turmoil and upheaval. The rising army of jobless youths took to cultism, prostitution and the highway. We became the land of 419 – a byword among the nations.

 The confidence of Africa’s greatest nation has been put on trial. Our key planning agencies and development institutions were virtually coerced into adopting an absurd macroeconomic paradigm that was largely anchored on a double negative, “poverty reduction”. Those of our economists who embraced the new neoclassical open economy macroeconomics dogma were given opportunities for ascendance and preferment. The giants of Nigerian economics – men such as HMA Onitiri, S. O. Olayide, Ojetunji Aboyade, Sam Aluko and Pius Okigbo — were virtually consigned to the fringes.  Some of them despaired and died. The smaller minds too over, most of them with little or no understanding of industry, least of all of the foundational meaning of economics as a handmaiden of the Aristotelian Good Life.

 Among the few who courageously protested that the whole thing was nonsense were the likes of the late Professor Bade Onimode, Comrade Ola Oni and Adebayo Adedeji during his time at the UN Economic Commission for Africa — lone voices crying in the wilderness. For all their pains, they were blackballed from all the gilded clubs of the West. Adedeji, I must say, has had the last laugh.

 Today, we have a new window of opportunity. The collapse of the Washington Consensus at the wake of the Great Recession has made it clear that everything cannot be left to markets and that a casino economy driven largely by bankers will sooner or drive itself aground. The ghost of Lord Keynes is being resurrected. For countries such as ours, having wriggled out of our debt with the Paris Club and having accumulated sizeable external reserves, the room for policy manoeuvre has been considerably enhanced.

 Economists such as Dani Rodik at Princeton and Ha-Joon Chan of Cambridge University have championed the paradigmatic resurgence in favour of ‘guided’ state intervention in macroeconomic management. Rodik defines industrial policy as a mix of interventions that “stimulate specific economic activities and promote structural change”. Industrial policy encapsulates policies targeting non-traditional agriculture and services in addition to trade and fiscal policies, incentives on manufactures and public subsidies as well as policies that promote such new sectors as tourism, biotechnology and renewable energy.

 Sound industrial policy requires critical interventions in certain key areas: upgrading productive capacities through innovation to increase value; poverty alleviation through effective incomes  and labour policies, public expenditures and entrepreneurship and technology development; enhance full employment while promoting inclusive growth through pro-growth macroeconomic policies; fostering structural transformation from agrarian to post-agrarian societies; improving supply of all public inputs with a view to raising labour productivity; and building capacities at the firm level while fostering collective learning and facilitating structural diversification of the economy.

 It is one thing to build up elaborate plans. The devil is in implementation. I can point to a dozen such plans that have been gathering dust in departments of government. For our industrial revolution to succeed, it must have champions at the highest levels of government, industry and civil society. We also need a rigorous implementation roadmap. We must mobilise all stakeholders and create the necessary momentum for change.

 An industrial revolution is not a dinner party. It is a serious business. It requires pursuing policies on critical support areas that will lead to the quantum leaps we desire: revamping the education sector to emphasise science, engineering and technical skills; rejuvenation of the iron and steel and related machine tools and precision engineering sector; a robust rail and transport sector, including automotive, shipbuilding and aircraft assembling. Above all, we must aim to re-boot the real sector and SMEs by providing cheap, affordable credit. A situation were businesspeople incur loans at rates of 35 percent is completely untenable. We must create a vibrant industrial sector that is served by the banks instead of an economy that currently serves the banks.

 By: OBADIAH MAILAFIA